Maine Bass Fishing Linkfest!

Good Saturday evening.

The weather was quite volatile this week, as were global markets. Weather in the NY region shut down trains, planes and automobiles on Wednesday — first fog, then flash flooding, then a tornado watch ground flights at many regional airports.

Hotnot_20070720183559So too did the markets react to a perplexing interplay of cause and effect: The contained sub-prime woes are becoming less contained, earnings reports have come in mixed, with some high profile hits and misses. Even as economic data came in softer than expected, Fed Chair Bernanke acknowledged on Capitol Hill that inflation remains the greater threat than any economic slowing — for now. Thus, we remain as data dependent as ever.

For the week, the big winners were Gold and Oil, reacting to the still falling dollar and the slow-spreading sub-prime contagion. They tacked on 2.7% and 2.2% respectively. All things considered, the Dow’s slippage this week of but 0.4% was minor, as was the Nasdaq’s 0.7% dip. The SP500 fared worse, falling 1.2%, while the small cap Russell 2000 had the worst week of the major indices, sliding 2.3%. Globla and European stocks fell 0.6% and 1.6% respectively. As they have so often recently, REITs continued to grace the bottom of this list, losing 3% for the week. Despite this, their 52 week performance remains plus 12.5%. 

Barron’s Trader column noted:

"We’re at the point in the mature cycle where we all know excesses have been built up, and everyone is watching for signs that point to the end of the cycle," says Jeffrey Kleintop, chief-market strategist at LPL Financial. "The market’s perspective will get even more short-term from here, and the bull will be a rougher ride."

Let’s get on with our review of the week that was: time to get clicking:


Stocks: No Time to Be Scared:Experts say the mergers-and-acquisitions frenzy will continue, as there’s plenty of money in private equity to go around. Earnings are beating forecasts, and that’s what drives stock prices. Growth abroad is helping to boost sales and profits, while companies’ increased stock buyback plans are boosting earnings per share. (Business Week)

Where’s the Earnings Growth? The discussion on the fundamental profit environment during S&P’s
Investment Policy Committee meetings continues to revolve around an
expected lack of real earnings progress in 2007. S&P analysts
estimate the S&P 500 index will post only 5% profit growth in the
second quarter, a continued deceleration from the 8% increase posted in
the first quarter of 2007. (BusinessWeek)

Bearish/Bullish Sentiment   

• Doug Kass points out we are Loaded Up on Leverage   (

Bill Miller speaks
For 15 years, legendary fund manager Bill Miller has been a walking
counterargument to index funds. But could anyone ever hope to find the
next Bill Miller? He thinks so.  (CNN/Money)

Energy Shock: Sector’s Shares Still a Bargain: The average price-to-earnings ratio for shares in the
Philadelphia Stock Exchange’s oil equipment and services index, based
on expectations for earnings over the next 12 months, is 15. That’s
below the 10-year average of 21 times, according to RBC Capital
Markets. The overall price-to-earnings multiple for stocks in the
S&P 500 index is 16. (Wall Street Journal)

How Costco Became the Anti-Wal-Mart
With his ferocious attention to detail and price, Mr. Sinegal has made
Costco the nation’s leading warehouse retailer, with about half of the
market, compared with 40 percent for the No. 2, Sam’s Club. (NYTimes)

•  Morningstar: Market Trading at Fair Value

UK Profit warnings at five-year high:
Profit warnings issued by UK-listed firms are at their highest level
since the low point of the technology-led stock market crash in 2001


The Wall of worry continues to build:

Bernanke Breaks With Greenspan, Stresses Forecasts, Consumers: There are clear words talking about a forecast, not rhetorical gesticulations about an individual’s feelings. That is the transformation.” (Bloomberg)

Economic Indicators Hint at Toll From Housing Slump:  The economy could be in for a sluggish spell in coming months as the housing slump takes a toll on businesses and consumers. The Conference Board’s index of leading economic indicators, released yesterday, signaled economic weakness with a 0.3 percent decline in June, more than the 0.1 percent analysts were expecting. The index had risen 0.2 percent in May after dropping 0.2 percent in April. The report is intended to forecast economic activity in the next three to six months. (New York Times)


 "Right now things are starting to come unglued" That’s a quote from Charles Gradante of hedge-fund consultant Hennessee Group, about the spreading subprime CDO problem. See also this letter to hedge fund investors
from Bear Stearns CEO about the now worthless funds.

A Brief and Recent History of Housing Foreclosures

Getting REO Business Is EASY!   


McClatchy, New York Times Hit as Housing Moves to Web: A 14 percent decline in spending on real estate ads in the first quarter accelerated in the second period, estimated media consultants Borrell Associates in Norfolk, Virginia. Newspapers’ real estate ads will drop by more than one- third by 2011, while online housing ads will rise 60 percent and overtake print for the first time, Borrell predicted. (Bloomberg)


Economics According to Google: An interview with Google’s new chief economist   

Why I returned my iPhone   (Machinist/Salon)

How Top Bloggers Earn Money (Business Week)



• I have been greatly enjoying The Money Game by Adam Smith. This 1966 book is another one of those classic books that shows the prime driver of markets  are, and will forever be, human nature.

The Simpsons Theme Music, played by one person on two guitars simultaneously.   


That’s all from the deep woods of Maine, where the beer is cold, the Bass are biting and the scotch flows freely.


Got a comment, suggestion, link idea? Or do you just have
something on your mind?
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What's been said:

Discussions found on the web:
  1. peter from oz commented on Jul 21

    when walking thru the deep woods of Maine
    beware those excitable inexperienced Bear Hunters
    particularly that guy from Forbes!
    rgds pcm

  2. Bucky Katt commented on Jul 21

    I have a signed copy of The Money Game.
    (Adam Smith and George Goodman)

    You jogged my memory, I will dig it out and re-read it

  3. dryfly commented on Jul 21

    then a tornado watch ground flights at many regional airports.

    Good grief – if they shut down airports in the Midwest for tornado watches – you couldn’t fly out here from March to October.

    ‘Warnings’… yes, that’s a problem… ‘watches’, not so much.

  4. matt wilbert commented on Jul 22

    The Money Game is a great book. I first read it when I was about ten, and I have read it several times since then.

    It is good to read when things are bubbly.

  5. Big Al commented on Jul 22

    Another Money Game fan, I liked the last part where the young man is trying to sell Oil Shale stocks.

  6. Philippe commented on Jul 22

    The sub prime lending

    Les Misérables or « There is something rotten in the kingdoms of finance»

    When looked at through the prism of time and events there are quiet few puzzling events

    2006 Bonuses and banner years for the banking industry except for HSBC, few specialised lenders, and US regional banks which were caught on the wrong primitive, the direct mortgage housing loans.
    The primitive was homogeneous in its fate but the derivatives were not in the same vein (rare mathematic case).

    2007 Two quarters of results will show that the evil is the primitive and nowhere else to be found meanwhile CDO’s are investment grade and diluted throughout the financial spheres until July very dull period of the business attention when every agent ,business originator wholesaler and wholesale lenders , risk agencies become implied either as direct casualty and or legal culprit. The mathematics are in order and the derivatives belong to the same primitive.

    It will have required at least NINE MONTHS for the professionals of the industry to start assessing their risks, reveal prices and casualties.

  7. rob commented on Jul 22

    I imagine you are catching small mouth? Always wanted to fish in the great white north.

  8. ECONOMISTA NON GRATA commented on Jul 22

    This is going to be an exciting week. I’m quite sure that some will feel anxiety and some exhiliration. The writing is clearly on the wall. The domestic rotation from corporates to treasuries, dollar declining vs yen as it relates to carry, the rest of the world as it relates to faith, crude, gold and last but not least, a barometer that some are starting to notice “finaly” BX…

    The music stopped…!

    Wait…! there’s only one chair…

    Someone is already sitting on it…!

    Who is that….?

    Why, it’s Pete Peterson… He’s sooooo Old School….

    Have fun everyone… ;-)


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